Index

Information

N1BDLTJTL3

TSMC Expects First-Half Smartphone Slump

From : EE Times

TAIPEI — Taiwan Semiconductor Manufacturing Co. (TSMC), the largest foundry for customers in the smartphone business including Apple and MediaTek, says it is expecting an inventory correction in smartphones to continue through the first half of this year.

“Fabless days of inventory (DOI) are still high. Our second-quarter guidance reflects a severe inventory adjustment in the smartphone and PC markets,” TSMC Co-CEO Mark Liu said at an event in Taipei to announce the company’s first-quarter results. “Fabless DOI should return to normal around the end of the second quarter this year.”

The company, a bellwether for the electronics industry, revised its outlook for the overall semiconductor market upward by three percentage points to 7 percent growth this year due to stronger than expected demand for memory products. For the same period, TSMC cut its forecast for overall foundry market growth to 5 percent from the original 7 percent it predicted three months ago. TSMC maintained its expectation for its own growth to be in a range of 5 percent to 10 percent.

The company, which has about half of the overall foundry market, said it expects to increase its market share during the second half of this year as it ramps up production of 10nm products.

TSMC has lagged behind foundry rival Samsung by about three months with the launch of 10nm products.

The company may see 10nm sales soar during the second half this year as it uses the 10nm process to make the A11 application processor for Apple’s iPhone 8, according to independent analyst Andrew Lu in a report written for research provider Smartkarma. TSMC says it expects 10nm to account for about 10 percent of its sales during the second half of this year.

Leading GeometriesIn the meantime, it’s been a bit of a slog. Sales of TSMC’s most advanced 16/20 nm products slipped to 31 percent of total first quarter 2017 revenue compared with 33 percent during the fourth quarter of 2016. Sales of communications chips fell by 18 percent between the two quarters.

In the 16/20nm node, the company has faced strong competition from Samsung, which makes 14nm products for Qualcomm. TSMC aims to offer 12nm products based on its 16nm technology after it completes 12nm development work in the second half of this year. The 12nm technology will be an “optical shrink” of 16nm, which will allow customers to convert existing 16nm designs easily, according to TSMC Co-CEO CC Wei.

TSMC’s cash cow 28nm products edged up to 25 percent of the company’s overall sales in the first quarter this year compared with 24 percent in the fourth quarter last year. The company is hanging on to a 90 percent share of the 28nm market even as rivals such as Intel are trying to take away business in that segment, according to analysts at the results announcement.

TSMC may start to gain ground on its main rival Samsung when the Taiwan foundry starts production of 7nm chips in 2018.

“We will have a higher market share in 7nm,” Co-CEO Liu said.

Packaging TechTSMC expects its new packaging technology to start contributing more to company revenue. Its Integrated Fan-Out (InFO) will account for $500 million in sales this year compared with $100 million during the fourth quarter of last year.

TSMC says it is developing InFO packaging technology that provides “highly flexible integration of active and passive chip components for the 10nm, 7nm and more advanced nodes”. The company said it has been allocating an increasing portion of its capital expenditure to InFO and may spend as much as $1 billion on the packaging technology in the near future.